CAD A shaky start to the week and marked underperformance amidst concerns about the economy after BoC tightening. BoC business outlook survey declined from its high level, which had been expected, although did remain positive and continued to point to healthy business sentiment.

GBP Buffeted by Brexit headlines yet again, and in particular reports that there could be a complete breakdown in negotiations if the EU fails to compromise – this just ahead of more talks between UK PM May, EU’s Barnier and Juncker. Cable dropped around ½ cent on the wire headline, but recovered relatively quickly with a major player advocating a long position earlier in the day. Eur/Gbp eased back from a spike just over 0.8900, with decent option expiries expected to exert
some influence (1.7 bn between 0.8850-0.8900).

EUR Eur/Usd pivoting around the 1.1800 level, and not really rattled by the latest stand-off between Catalonia and Madrid (former failed to declare its hand on independence, prompting the Government to declare that it has moved a step nearer to invoking Article 155, as the deadline now rolls on to Thursday). Option expiries also prominent in this pairing, with some 2.7 bn spanning 1.1760-1.1910.

JPY Usd/Jpy also pretty static against a flattish greenback (DXY holding just above 93.00) despite Fed’s Yellen maintaining December FOMC tightening on the cards (based on inflation picking up ahead).


Dollar Index H4

Price coming off WM2 Bull zone targeting WM4. Resistance up ahead at WPP marking previous support from last week's breakout. Daily has further support at MPP marking top of double bottom as per yesterday's post.

US10Y H4

WPP marks resistance of previous range with a target of WR2. It is possible this support does not hold and we head down to WM1 off of WM3 Keep in mind if we want Gold to go down we either want Dollar strength or 10Y yields up (which means 10Y price down). If yields move higher then that could mean Yen weakness...

S&P 500

Price remains sideways with Bulls failing to break above MM4... Profit taking is ok though if we see a significant rise in the VIX followed by Yen strenth and commodity weakness (all except Gold) then that would put us in risk off market conditions. Not saying it is going to happen though keep an eye out.

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